Saturday, October 02, 2004

Thats no good.

A board director of Morgan Stanley and chief financial analyst of Asia Pacific warned that China may be headed for an economic downturn, fueled by another round of heated speculation in the Chinese economy. While a "soft-landing" would be preferred, one must wonder what the effects of a serious downturn would be on U.S.-based importers of Chinese goods. The most important result of a large recession on China would be that many of its banks are likely to fail without state intervention (which is pretty much gauranteed, since they are all state-owned). Those that survive would be forced to dramatically reduce lending. Increased interest rates and the difficulty in securing credit would make it very difficult for our Chinese suppliers to rapidly increase their supply to meet demand. Thus the marginal cost -- the cost of producing additional units-- would increase dramatically. No longer would the factories be able to easily add more machines, labor, and other production imports. The resulting increases in prices, along with any change in the currency, could have severely detrimental effects on import businesses around the world.

Nonetheless, many importers are small, nimble firms, capable of adapting to the times. I am convinced that those who have maintained solid relationships in China and other parts of the world will continue to prosper. Any Chinese recession, regardless of how severe, will eventually be overcome. Even the great depression was overcome. Once a country moves toward unequivocally toward capitalism as China has, there is no turning back the forces of progress.

Thursday, September 30, 2004

Homegrown Chinese Car Makers

The Detroit News published a great article about Chinese car companies a while back. This identifies three of the biggest domestic firms: Geely Group, Great Wall and BYD Auto. Each of these firms has begun exporting cars to Africa and the Middle East. Geely has also begun selling cars in Mexico. Such penetration within NAFTA should have the U.S. players a bit worried. Especially with the absolute lack of intellectual property protection in China. Good news for smaller importers though, if we can get in on the action.

Wednesday, September 29, 2004

China Motors Blog Founded

I recently created the China Motors blog to track more closely any developments from the Chinese motor industry. I'll be tracking brands, manufacturers, importers, distributors as well as economic policies that may affect the industry. Please visit the site and post comments freely.


Monday, September 27, 2004

Great Resource

Securities.com is one of the net's best resources for finding industry and country information from all over the world. The China section compiles a tremendous amount of news and background info from both English and Chinese language sources.

(Aside: I was happy to see that Google AdSense actually placed an ad for a report from this firm on the Asian Imports Blog today. Just a testament to the ability of Google's technology to place ads that are truly relevant.)